McDonald's Faces Two-Pronged Challenge in US Home Market

McDonald's is facing a two-pronged challenge in its US home market: declining customer visits and growing friction between franchisees and corporate over software-driven menu pricing.

The chain has deployed algorithms across nearly 14,000 US locations to calculate suggested menu prices based on local purchasing power and competitor data. While McDonald's claims that operators retain final say over what they charge, deviations from the suggested prices are tracked by headquarters and factored into performance reviews.

Franchisees feel pressured to adopt these recommendations despite rising operating costs, which have climbed 36% since 2019, according to the National Restaurant Association. The same-restaurant sales in the US are likely to remain negative in the third quarter, with CFO Ian Borden warning of a double-digit percentage decline in spending by lower-income customers over the past two years.

A Citi analyst found that US customer traffic declined 4.6% during the quarter, and investors are trimming their expectations for McDonald's performance. The stock has fallen to a fresh 52-week low of EUR 203.80, with year-to-date decline standing at 22%. The company's modernization efforts and profitability goals will be put to the test in the coming quarters.